SSTI Digest

Applicants with advanced degrees from U.S. institutions of higher education who are seeking H-1B visas will be the beneficiaries of a new rule announced by the Department of Homeland Security last week. The rule change reverses the order by which U.S. Citizenship and Immigration Services (USCIS) selects H-1B petitions under the H-1B regular cap and the advanced degree exemption.  

The rule change is intended to increase the number of H-1B visas awarded to individuals with a master’s degree or higher degree from a U.S. institution of higher education. Specifically, DHS estimates up to a 16 percent increase (5,340 workers) in the number of H-1B visas awarded to individuals with a master’s degree or higher from a U.S. institution of higher education.

The Economic Development Administration is now accepting applications for the Regional Innovation Strategies program through April 4. Funding is available through the i6 Challenge, focused on transforming innovations into products and services, and Seed Fund Support, to help expand the availability of investment capital for startups. SSTI will again be hosting an informational webinar with EDA — see details and register below.

Regional Innovation Strategies program FY 2019 informational webinar
Tuesday, Feb. 12 @ 2 P.M. EST

Register Today!

Funding for the RIS program is competitive. In the 2018 cycle, 233 organizations requested $120 million, and EDA was able to make 40 awards totaling $21 million. Commerce’s FY 2019 budget is not yet complete, so the amount of funding that will be available this year is not yet known — although the chambers seem to have agreed on $25 million, should a final budget advance.

More than half of the governors have now delivered their state of the state addresses, and TBED initiatives continue to play a prominent role in their plans. Higher ed’s affordability and/or role in the workforce are concerns in Montana, South Carolina, Utah and Vermont. Maryland is looking at clean energy and higher education. Utah is also grappling with burgeoning growth while Vermont considers measures to increase its workforce.

Maryland Gov. Larry Hogan’s Jan. 30 state of the state address cited the “historic economic growth and record job creation” the state has experienced to fund education and the state’s other priorities, including eight legislative proposals in tax relief over the next five years. His TBED focus includes:

“Tax cuts for the college graduates who worked hard to earn their degree, only to face the harsh reality of crippling student loan debt.”

The U.S. Department of Energy’s (DOE) Office of Energy Efficiency and Renewable Energy (EERE) announced their intent to issue a Funding Opportunity Announcement (FOA) establishing a new Clean Energy Manufacturing Innovation Institute. The institute will develop technologies that will advance U.S. manufacturing competitiveness, energy efficiency and innovation. This will be the sixth institute established by DOE and will focus on understanding the evolving cybersecurity threats to greater energy efficiency in manufacturing industries, developing new cybersecurity technologies and methods, and sharing information and expertise to the broader community of U.S. manufacturers. 

The share of the nation’s economy stemming from small businesses — “the lifeblood of the U.S. economy” — has waned since 1998, according to a new report by Kathryn Kobe and Richard Schwinn on behalf of the U.S. Small Business Administration’s Office of Advocacy. Despite overall growth in small business GDP, the number of small businesses and their employment levels have not yet recovered from their pre-recession value. At the same time, the numbers of large businesses and large business employees have grown continuously, and large business GDP makes up an increasing share of the national pie.

Senators Jerry Moran (R-Kan.) and Mark Warner (D-Va.), co-signed by Senators Roy Blunt (R-Mo.) and Amy Klobuchar (D-Minn.), re-introduced the Startup Act today. The bill would enact an array of innovation policies, including reauthorizing Regional Innovation Strategies, creating a new commercialization grant program, and implementing a startup visa. SSTI has endorsed the bill and hopes to see the legislation passed by the 116^th Congress.

A statement from Senator Moran’s office to mark the bill’s introduction read, “Congress must prioritize policies that will help recruit and retain highly-skilled students and innovators, bolster a pro-growth environment and enable entrepreneurs to transform ideas and research into companies and products.”

In support of the Startup Act, SSTI president and CEO, Dan Berglund said:

While competition between states over business incentives and headquarters attraction is often derided, new research published in the Journal of Technology in Society suggests that competition in technology-based economic development is hardly a zero-sum game. In Persistent peers and the rhetoric of state economic competition, author David Schwarzkopf from Bentley University uses cluster analysis to track state progress across 53 TBED measures published by the NSF through its Science & Engineering Indicators series. Over a 12-year study period, Schwarzkopf finds that all 50 states improved on more than half of the variables used, with more than 60 percent of the states moving in the same direction on 80 percent of the measures. He argues that although states clearly compete, more focus is needed on how each state is making progress while also working to improve on their deficiencies.   

Governors are reaching into their toolkits to build tech-based economies, utilizing Opportunity Zones, tax credits, broadband infrastructure and workforce development initiatives among other things. This week, as we continue to review their state of the state addresses for TBED news, we see some governors still trying to reshape their states’ struggling economies while others are building on past successes and proposing new initiatives.

Arkansas wants to become a technology hub and is proposing a Technology and Innovation Council to help achieve that goal. Delaware is hoping to build on its Angel Investor Tax Credit and utilize Opportunity Zones to spur development. Energy and climate change are on the agendas for many governors, and this week we see it called out by governors in Delaware, Hawaii, New Jersey, New Mexico and New York. Tools for rural development are on the radar in Georgia, while workforce development and education are just part of the plan in New Jersey and New York.

In his Jan. 15 state of the state, Arkansas Gov. Asa Hutchinson highlighted his goal of making the state a technology hub:

The National Science Foundation (NSF), the fifth largest distributor of SBIR awards among federal agencies, received more than 20,000 proposals over the decade long period from 2008 to 2017, approving more than 3,600 (16.8 percent), according to an SSTI analysis of NSF data. NSF SBIR awards are the least concentrated of all federal agencies, as measured by share of awards going to firms with more than 10+ awards. An SSTI analysis found that New Hampshire (28 percent success rate), Wisconsin (26.7 percent success rate), and Louisiana (24.7 percent) were the most likely to convert their NSF SBIR applications into awards.

The map above shows NSF SBIR/STTR award success by state over the 10-year period from 2008 to 2017. Shading represents the state’s success rate, with darker shades representing a higher approval rate of submissions, while bubble-size represents the average number of NSF/STTR awards per year.

How likely would you be to leave your current job to form a startup if you had $3,600 in the bank? Would your interest increase if you had $147,000? While neither amount is enough to scale a business, the latter case obviously affords more cushion to learn the ropes or absorb the impacts of a few missed paychecks. These amounts are the median wealth for black and white households, respectively, according to a new report by the Institute for Policy Studies. While the report does not directly look to entrepreneurship as a factor — nor, notably, as a solution — the implications for regional innovation economies are clear.

Over the six-year period from 2013 to 2018, as total venture capital investments nearly tripled, growing from $47.5 billion in 2013 to nearly $131 billion in 2014, the number of deals increased by just 13.5 percent according to new data from the NVCA-PitchBook Venture Capital Monitor. The $131 billion in total VC investments in 2018 is the largest amount since PitchBook began tracking the data in 2006 and the first year since the height of the dot-com boom that annual capital investment eclipsed $100 billion. Last week, SSTI wrote how the VC industry was shaped by concentration including both geographic concentration and increases in mega-rounds/funds in 2018.

Based on the PitchBook data, SSTI has prepared information on VC investment by state and changes over time. That data, along with state-by-state totals for 2013-2018 are available in Excel format below. In addition to deals and dollars for each state, SSTI also includes:

A rulemaking committee, convened by the U.S. Department of Education, has begun work to rethink higher education and is considering ways to refine and streamline the accreditor recognition process and role, while also reviewing regulatory areas affecting innovation in higher education. The committee was convened to develop proposed regulations related to a number of higher education practices and issues, including: accreditation; distance learning and educational innovation; TEACH grants; and participation by faith-based educational entities.